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A11568 Summary:

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A11568 Floor Votes:

A11568 Text:

 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          11568
 
                   IN ASSEMBLY
 
                                      June 27, 2010
                                       ___________
 
        Introduced  by  COMMITTEE ON RULES -- (at request of M. of A. Silver) --
          read once and referred to the Committee on Ways and Means
 
        AN ACT to amend the state finance law, in relation to  establishing  the
          New York fraud, enforcement and recovery act
 
          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
 

     1    Section 1. Section 188 of the state finance law, as added  by  section
     2  39  of  part  C of chapter 58 of the laws of 2007, is amended to read as
     3  follows:
     4    § 188. Definitions. As used in this article, the following terms shall
     5  mean:
     6    1. "Claim" (a) means any request or demand, whether under  a  contract
     7  or  otherwise,  for  money  or  property [which is made to any employee,
     8  officer, or agent of the state or a local government, or to any contrac-
     9  tor, grantee or other recipient, if the  state  or  a  local  government
    10  provides  any  portion  of  the  money or property which is requested or
    11  demanded or will reimburse such contractor, grantee, or other  recipient
    12  for any portion of the money or property which is requested or demanded]
    13  that

    14    (i)  is  presented  to an officer, employee or agent of the state or a
    15  local government; or
    16    (ii) is made to a contractor, grantee,  or  other  recipient,  if  the
    17  money or property is to be spent or used on the state or a local govern-
    18  ment's  behalf  or  to  advance  a  state or local government program or
    19  interest, and if the state or  local  government  (A)  provides  or  has
    20  provided  any portion of the money or property requested or demanded; or
    21  (B) will reimburse such contractor, grantee, or other recipient for  any
    22  portion of the money or property which is requested or demanded;
    23    (b)  does  not  include requests or demands for money or property that
    24  the state or a local government has already paid  to  an  individual  as

    25  compensation  for  government employment or as an income subsidy with no
    26  restrictions on that individual's use of the money or property.
    27    2. "False claim" means any claim which is, either in  whole  or  part,
    28  false or fraudulent.
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD17863-04-0
        A. 11568                            2
 
     1    3. "Knowing and knowingly" (a) means that [with respect to a claim, or
     2  information relating to a claim,] a person, with respect to information:
     3    [(a)] (i) has actual knowledge of [such claim or] the information;

     4    [(b)]  (ii)  acts  in  deliberate ignorance of the truth or falsity of
     5  [such claim or] the information; or
     6    [(c)] (iii) acts in reckless disregard of  the  truth  or  falsity  of
     7  [such claim or] the information[.]; and
     8    [Proof]  (b)  require  no  proof of specific intent to defraud [is not
     9  required], provided, however that acts occurring  by  mistake  or  as  a
    10  result of mere negligence are not covered by this article.
    11    4. "Obligation" means an established duty, whether or not fixed, aris-
    12  ing  from  an express or implied contractual, grantor-grantee, or licen-
    13  sor-licensee relationship, from a  fee-based  or  similar  relationship,

    14  from statute or regulation, or from the retention of any overpayment.
    15    5.  "Material"  means  having  a  natural tendency to influence, or be
    16  capable of influencing the payment or receipt of money or property.
    17    6. "Local government" means any New York county, city, town,  village,
    18  school district, board of cooperative educational services, local public
    19  benefit corporation or other municipal corporation or political subdivi-
    20  sion of the state, or of such local government.
    21    [5.]  7.  "Original  source"  means a person who (a) prior to a public
    22  disclosure under paragraph  (b)  of  subdivision  nine  of  section  one
    23  hundred  ninety of this article has [direct and independent] voluntarily

    24  disclosed to the state or a local government the  information  on  which
    25  allegations  or  transactions in a cause of action are based, or (b) who
    26  has knowledge [of the information on which allegations are  based,  and]
    27  that  is  independent  of  and materially adds to the publicly disclosed
    28  allegations or transactions, and who has voluntarily provided the infor-
    29  mation to the state or a local government before  or  simultaneous  with
    30  filing an action under this article [which is based on the information].
    31    [6.]  8.  "Person" means any natural person, partnership, corporation,
    32  association or any other legal entity  or  individual,  other  than  the
    33  state or a local government.

    34    [7.]  9. "State" means the state of New York and any state department,
    35  board, bureau, division, commission, committee,  public  benefit  corpo-
    36  ration,  public  authority, council, office or other governmental entity
    37  performing a governmental or proprietary function for the state.
    38    § 2. Subdivision 1 of section 189 of the state finance law,  as  added
    39  by section 39 of part C of chapter 58 of the laws of 2007, is amended to
    40  read as follows:
    41    1.  Subject  to the provisions of subdivision two of this section, any
    42  person who:
    43    (a) knowingly presents, or causes to be presented[, to  any  employee,
    44  officer or agent of the state or a local government,] a false or fraudu-
    45  lent claim for payment or approval;
    46    (b)  knowingly  makes,  uses,  or  causes  to be made or used, a false

    47  record or statement material to [get] a false or fraudulent claim  [paid
    48  or approved by the state or a local government];
    49    (c) conspires to [defraud the state or a local government by getting a
    50  false  or  fraudulent claim allowed or paid] commit a violation of para-
    51  graph (a), (b), (d), (e), (f) or (g) of this subdivision;
    52    (d) has possession, custody, or control of property or money used,  or
    53  to  be  used,  by  the  state  or  a local government and[, intending to
    54  defraud the state or a local government  or  willfully  to  conceal  the
    55  property  or money,] knowingly delivers, or causes to be delivered, less
        A. 11568                            3
 

     1  [property or money] than [the amount for which  the  person  receives  a
     2  certificate or receipt] all of that money or property;
     3    (e)  is authorized to make or deliver a document certifying receipt of
     4  property used, or to be used, by the state or a  local  government  and,
     5  intending  to defraud the state or a local government, makes or delivers
     6  the receipt without completely  knowing  that  the  information  on  the
     7  receipt is true;
     8    (f)  knowingly buys, or receives as a pledge of an obligation or debt,
     9  public property from an officer or employee of  the  state  or  a  local
    10  government  knowing  that the officer or employee [lawfully may not sell
    11  or pledge the property] violates a provision  of  law  when  selling  or
    12  pledging such property; or

    13    (g)  knowingly  makes,  uses,  or  causes  to be made or used, a false
    14  record or statement material to [conceal, avoid, or decrease]  an  obli-
    15  gation  to  pay  or  transmit  money or property to the state or a local
    16  government[;] shall be liable[: (i)] to the state or a local government,
    17  as applicable, for a civil penalty of not less than six thousand dollars
    18  and not more than twelve thousand dollars, plus three times  the  amount
    19  of  all  damages,  including  consequential  damages, which the state or
    20  local government sustains because of the act of that person[;  and  (ii)
    21  to  any local government for three times the amount of damages sustained
    22  by such local government because of the act of that person].

    23    § 3. Subdivision 4 of section 189 of the state finance law,  as  added
    24  by section 39 of part C of chapter 58 of the laws of 2007, is amended to
    25  read as follows:
    26    4.  (a)  This  section shall [not] apply to claims, records, or state-
    27  ments made under the tax law only if (i) the net income or sales of  the
    28  person  against whom the action is brought equals or exceeds one million
    29  dollars for any taxable year subject to any action brought  pursuant  to
    30  this  article;  and (ii) the damages pleaded in such action exceed three
    31  hundred and fifty thousand dollars.
    32    (b) The attorney general shall consult with the  commissioner  of  the
    33  department of taxation and finance prior to filing or intervening in any

    34  action  under  this article that is based on the filing of false claims,
    35  records or statements made under the tax law. If the state  declines  to
    36  participate  or to authorize participation by a local government in such
    37  an action pursuant to subdivision two of section one hundred  ninety  of
    38  this article, the qui tam plaintiff must obtain approval from the attor-
    39  ney  general  before making any motion to compel the department of taxa-
    40  tion and finance to disclose tax records.
    41    § 4. Subdivision 1 of section 190 of the state finance law,  as  added
    42  by section 39 of part C of chapter 58 of the laws of 2007, is amended to
    43  read as follows:
    44    1.  Civil  enforcement  actions.  The  attorney general shall have the
    45  authority to investigate violations under section  one  hundred  eighty-

    46  nine of this article. If the attorney general believes that a person has
    47  violated  or  is  violating  such section, then the attorney general may
    48  bring a civil action on behalf of the people of the state of New York or
    49  on behalf of a local government against such person. A local  government
    50  also  shall  have  the authority to investigate violations that may have
    51  resulted in damages to such local government under section  one  hundred
    52  eighty-nine  of  this  article,  and may bring a civil action on its own
    53  behalf, or on behalf of any subdivision of  such  local  government,  to
    54  recover  damages  sustained by such local government as a result of such
    55  violations.  No action may be filed pursuant to this subdivision against
    56  the federal government, the state or a local government, or any  officer
        A. 11568                            4
 

     1  or employee thereof acting in his or her official capacity. The attorney
     2  general  shall  consult  with  the  office of medicaid inspector general
     3  prior to filing any action related to the medicaid program.
     4    §  5.  Paragraphs  (a)  and (b) of subdivision 2 of section 190 of the
     5  state finance law, as added by section 39 of part C of chapter 58 of the
     6  laws of 2007, are amended to read as follows:
     7    (a) Any person may bring a qui tam civil action  for  a  violation  of
     8  section  one hundred eighty-nine of this article on behalf of the person
     9  and the people of the state of New York or a local government. No action
    10  may be filed pursuant to this subdivision against  the  federal  govern-
    11  ment, the state or a local government, or any officer or employee there-
    12  of acting in his or her official capacity.

    13    (b)  A  copy  of the complaint and written disclosure of substantially
    14  all material evidence and information  the  person  possesses  shall  be
    15  served on the state pursuant to subdivision one of section three hundred
    16  seven  of the civil practice law and rules. [The] Any complaint filed in
    17  a court of the state of New York shall be  filed  in  supreme  court  in
    18  camera,  shall  remain under seal for at least sixty days, and shall not
    19  be served on the defendant until the court so orders.   The  seal  shall
    20  not  preclude  the  attorney general, a local government, or the qui tam
    21  plaintiff from serving the complaint, any other pleadings, or the  writ-
    22  ten  disclosure  of  substantially all material evidence and information

    23  possessed by the person bringing the action, on relevant state or  local
    24  government  agencies,  or on law enforcement authorities of the state, a
    25  local government, or other jurisdictions, so that  the  actions  may  be
    26  investigated  or  prosecuted, except that such seal applies to the agen-
    27  cies or authorities so served to the same extent as the seal applies  to
    28  other parties in the action.
    29    If  the allegations in the complaint allege a violation of section one
    30  hundred eighty-nine of this article involving damages to a local govern-
    31  ment, then the attorney general may at any time provide a copy  of  such
    32  complaint  and written disclosure to the attorney for such local govern-
    33  ment; provided, however,  that  if  the  allegations  in  the  complaint

    34  involve damages only to a city with a population of one million or more,
    35  or  only  to  the state and such a city, then the attorney general shall
    36  provide such complaint and written disclosure to the corporation counsel
    37  of such city within thirty days.
    38    The state may elect to supersede or intervene  and  proceed  with  the
    39  action,  or  to  authorize  a  local  government that may have sustained
    40  damages to supersede or intervene, within sixty days after  it  receives
    41  both  the complaint and the material evidence and information; provided,
    42  however, that if the allegations in the complaint involve  damages  only
    43  to  a  city  with a population of one million or more, then the attorney
    44  general may not supersede  or  intervene  in  such  action  without  the
    45  consent  of  the  corporation counsel of such city. The attorney general

    46  shall consult with the office of the medicaid inspector general prior to
    47  superseding or  intervening  in  any  action  related  to  the  medicaid
    48  program.  The attorney general may, for good cause shown, move the court
    49  for extensions of the time during which the complaint remains under seal
    50  under this subdivision. Any such motions may be supported by  affidavits
    51  or other submissions in camera.
    52    §  6.  Paragraph  (d)  of  subdivision  2  of section 190 of the state
    53  finance law, as added by section 39 of part C of chapter 58 of the  laws
    54  of 2007, is amended to read as follows:
    55    (d)  If  the  state  notifies  the  court  that  it  intends to file a
    56  complaint against the defendant and thereby be substituted as the plain-
        A. 11568                            5
 
     1  tiff in the action, or to permit a  local  government  to  do  so,  such

     2  complaint must be filed within thirty days after the notification to the
     3  court.  For statute of limitations purposes, any such complaint filed by
     4  the  state or a local government shall relate back to the filing date of
     5  the complaint of the qui tam plaintiff, to the extent that the cause  of
     6  action of the state or local government arises out of the conduct, tran-
     7  sactions, or occurrences set forth, or attempted to be set forth, in the
     8  prior complaint of the qui tam plaintiff.
     9    §  7.  Paragraph  (f)  of  subdivision  2  of section 190 of the state
    10  finance law is amended by adding a new  closing  paragraph  to  read  as
    11  follows:
    12    The  qui tam plaintiff shall provide the state or any applicable local
    13  government with a copy of any document filed with the court on or  about

    14  the  date  it is filed, or any order issued by the court on or about the
    15  date it is issued.  A qui tam plaintiff shall notify the  state  or  any
    16  applicable  local  government within five business days of any decision,
    17  order or verdict resulting in judgment in favor of the  state  or  local
    18  government.
    19    §  8.  Subdivision 9 of section 190 of the state finance law, as added
    20  by section 39 of part C of chapter 58 of the laws of 2007, is amended to
    21  read as follows:
    22    9. Certain actions barred. [No court shall have  jurisdiction  over  a
    23  qui  tam  civil  action  brought  pursuant  to  subdivision  two of this
    24  section:
    25    (a) based on allegations or transactions which are the  subject  of  a

    26  pending civil action or an administrative action in which the state or a
    27  local government is already a party;
    28    (b) derived from public disclosure of allegations or transactions in a
    29  criminal, civil, or administrative hearing, in a legislative or adminis-
    30  trative report, hearing, audit or investigation, or from the news media,
    31  unless  the person who initiated the action is an original source of the
    32  information;]
    33    (a) The court shall dismiss a qui tam action under this article if:
    34    [(c)] (i) it is based on allegations or  transactions  which  are  the
    35  subject  of  a pending civil action or an administrative action in which
    36  the state or a local government is already a party;

    37    (ii) the [agency] state or local  government  has  reached  a  binding
    38  settlement  or other agreement with the person who [submitted such false
    39  claims] violated section one hundred eighty-nine of this article resolv-
    40  ing the matter and such agreement has been approved in  writing  by  the
    41  attorney general, or by the applicable local government attorney [if the
    42  matter involves allegations of false claims submitted to a local govern-
    43  ment]; or
    44    [(d)] (iii) against a member of the legislature, a member of the judi-
    45  ciary,  or  a senior executive branch official if the action is based on
    46  evidence or information known to the state when the action was brought.

    47    (b) The court shall dismiss a  qui  tam  action  under  this  article,
    48  unless opposed by the state or an applicable local government, or unless
    49  the  qui  tam  plaintiff  is  an  original source of the information, if
    50  substantially the same allegations or transactions  as  alleged  in  the
    51  action were publicly disclosed:
    52    (i)  in a state or local government criminal, civil, or administrative
    53  hearing in which the state or a local  government  or  its  agent  is  a
    54  party;
    55    (ii) in a federal, New York state or New York local government report,
    56  hearing,  audit,  or  investigation that is made on the public record or
        A. 11568                            6
 

     1  disseminated broadly to the general public; provided that such  informa-
     2  tion  shall  not  be deemed "publicly disclosed" in a report or investi-
     3  gation because it was disclosed or provided pursuant to article  six  of
     4  the public officers law, or under any other federal, state or local law,
     5  rule  or  program  enabling the public to request, receive or view docu-
     6  ments or information in the possession of  public  officials  or  public
     7  agencies;
     8    (iii)  in  the  news  media,  provided that such allegations or trans-
     9  actions are not "publicly disclosed" in the "news media" merely  because
    10  information  of  allegations  or  transactions  have  been posted on the
    11  internet or on a computer network.

    12    § 9. Section 191 of the state finance law, as added by section  39  of
    13  part C of chapter 58 of the laws of 2007, is amended to read as follows:
    14    §  191.  Remedies [of employees].   1. Any current or former employee,
    15  contractor,  or  agent  of  any  private  or  public  employer  who   is
    16  discharged,  demoted,  suspended,  threatened,  harassed or in any other
    17  manner discriminated against in the terms and conditions of  employment,
    18  [by  his or her employer] or otherwise harmed or penalized by an employ-
    19  er, or a prospective employer,  because  of  lawful  acts  done  by  the
    20  employee  [on  behalf of the employer], contractor, agent, or associated
    21  others in furtherance of an action brought under this article[,  includ-

    22  ing  the  investigation for, initiation of, testimony for, or assistance
    23  in an action filed or to be filed under this section] or  other  efforts
    24  to stop one or more violations of this article, shall be entitled to all
    25  relief  necessary  to make the employee, contractor or agent whole. Such
    26  relief shall include but not be limited to:
    27    (a) an injunction to restrain continued discrimination;
    28    (b) hiring, contracting or reinstatement to the position such [employ-
    29  ee] person would have had but for the discrimination or to an equivalent
    30  position;
    31    (c) reinstatement of full fringe benefits and seniority rights;
    32    (d) payment of two times back pay, plus interest; and
    33    (e) compensation for any special damages sustained as a result of  the

    34  discrimination,  including  litigation  costs  and reasonable attorneys'
    35  fees.
    36    2. For purposes of this section, a "lawful act" shall include, but not
    37  be limited to, obtaining or transmitting to the state, a  local  govern-
    38  ment,  a qui tam plaintiff, or private counsel solely employed to inves-
    39  tigate, potentially file, or file a cause of action under this  article,
    40  documents,  data, correspondence, electronic mail, or any other informa-
    41  tion, even though such act may violate a contract, employment  term,  or
    42  duty  owed  to the employer or contractor, so long as the possession and
    43  transmission of such documents are for the sole  purpose  of  furthering
    44  efforts  to stop one or more violations of this article. Nothing in this

    45  subdivision shall be interpreted to prevent any law enforcement authori-
    46  ty from bringing a civil or  criminal  action  against  any  person  for
    47  violating any provision of law.
    48    3.  An  employee,  contractor or agent described in subdivision one of
    49  this section may bring an action in the appropriate  supreme  court  for
    50  the relief provided in this section.
    51    §  10. Subdivision 1 of section 192 of the state finance law, as added
    52  by section 39 of part C of chapter 58 of the laws of 2007, is amended to
    53  read as follows:
    54    1. A civil action under this  article  shall  be  commenced  no  later
    55  than[:
        A. 11568                            7

     1    (a)  six  years  after  the date on which the violation of section one

     2  hundred eighty-nine of this article is committed; or
     3    (b)  three  years  after  the date when facts material to the right of
     4  action are known or reasonably should have been known by the official of
     5  the state or local government charged with responsibility to act in  the
     6  circumstances,  but  in  no event more than] ten years after the date on
     7  which the violation of this  article  is  committed[,  whichever  occurs
     8  last].   Notwithstanding any other provision of law, for the purposes of
     9  this article, an action under this article is commenced by the filing of
    10  the complaint [in the supreme court].
    11    § 11. Section 192 of the state finance law is amended by adding a  new
    12  subdivision 1-a to read as follows:

    13    (1-a)  For  purposes  of  applying  rule three thousand sixteen of the
    14  civil practice law and rules, in pleading an action brought  under  this
    15  article the qui tam plaintiff shall not be required to identify specific
    16  claims that result from an alleged course of misconduct, or any specific
    17  records  or  statements  used, if the facts alleged in the complaint, if
    18  ultimately proven true, would provide a reasonable indication  that  one
    19  or  more  violations  of section one hundred eighty-nine of this article
    20  are likely to have occurred, and if  the  allegations  in  the  pleading
    21  provide adequate notice of the specific nature of the alleged misconduct
    22  to permit the state or a local government effectively to investigate and

    23  defendants fairly to defend the allegations made.
    24    §  12.  Paragraph  (a)  of  subdivision  2 of section 190 of the state
    25  finance law, is amended by adding a new closing  paragraph  to  read  as
    26  follows:
    27    For  purposes of subparagraphs (i) and (iv) of paragraph (a) of subdi-
    28  vision eight of section seventy-three of the public  officers  law,  any
    29  activity by a former government employee in connection with the securing
    30  of  rights,  protections  or  benefits related to preparing or filing an
    31  action under this article shall not be deemed to  be  an  appearance  or
    32  practice before any agency.
    33    §  13.  This  act  shall take effect fourteen days after it shall have
    34  become a law and shall apply to claims, records or  statements  made  or
    35  used prior to, on or after April 1, 2007.